REINVENTING THE WEB: A New App Lets You Watch Whatever TV Program You Want, Including The Olympics, Anywhere In The World

Mike Nudelman/Business Insider
Of all the Olympic match-ups happening in Sochi next month, perhaps the most momentous will be the epic game of whack-a-mole that the International Olympic Committee will be playing with content pirates around the world.

If the history of the 2012 summer games offers any indication, the Web will be awash in shady live streams and guerrilla torrents, enabling winter sports devotees to slalom right past the array of international distribution deals that have been carefully engineered to squeeze the games for every last drop of revenue.

The committee recently issued a letter to Russian authorities requesting that a digital "rapid response team" be created to thwart Olympic pirates. Networks will have their own countermeasures, and the outcome is far from certain. But if BI's initial tests are any indication, a new circumvention tool will present a formidable challenge to license holders.

The Web application, called Hola, which promises to make it easier than ever for global Web-surfers to watch the Games — not to mention the latest episodes of "Sherlock," "Downton Abbey," and just about anything else on TV — at their whim, is experiencing a surge in popularity after a year of beta testing.
With Hola, US web users can view 'Sherlock' on the BBC's iPlayer.
BBC

Like most television networks around the world, official Olympics broadcasters like Russia's Channel One, Canada's CBC, China's CCTV and Great Britain's BBC— who have all forked over hefty license fees for the right to air the Games — utilize "geoblocking" tools to prevent anyone outside of their home territories from viewing their Web programming. Geoblocking allows content providers to sell off lucrative distribution rights region by region, a revenue stream that has long made up a critical chunk of each network's bottom line. (The IOC netted $775 million this year from NBC alone, who then turned around and pulled in $800 million in advertising.)

Now that whole system is under attack by Hola, a free virtual private network (VPN) proxy that soars over digital borders with the grace of an Austrian ski jumper.

"We call it better Internet," Hola's CEO Ofer Vilenski explains in a Skype call from his office in Netanya, Israel.

Hola is available for Chrome, Firefox, Windows and Android, but not the iPhone or iPad, just yet, due to challenges posed by Apple's walled-off system.

Hola isn't the only VPN proxy available, but it is free (most charge by the month) and unusually intuitive. "It's a very practical application of what has until now been a very occult technology," says Douglas Rushkoff, author of "Present Shock: When Everything Happens Now."

While the application's flaming smiley-face mascot is presumably a reference to the way it promises to speed up users' download times (more about that later), the logo hints at more incendiary potential, at least from the point of view of established media brands, the data companies that help power the Web, and government regulators. If the startup's founders and its deep-pocketed investors are right, Hola may actually manage to rewire the inner workings of the Internet as we know it.

Hola CEO Ofer Vilenski.
Hola

But first it will rewire our TV viewing habits: For instance, the app unlocks an array of international Netflix sites with an easy click. U.S. patrons of the popular streaming service squealed in agony Jan. 1, when "Platoon," "Top Gun," and the original "True Grit," along with nearly 90 other movies, vanished from their queues due to expiring licensing deals. Turns out many of those movies are still on Netflix Brazil. Meanwhile, Chile has an impressive assortment of Hitchcock classics, including "The Birds," "Psycho," "The Man Who Knew Too Much," and "Vertigo," none of which are available to U.S. subscribers. Canada offers the first four seasons of "Community." And Ireland has just about every episode of "The Good Wife."

A Netflix representative declined to comment about Hola, except to note that "crossing borders virtually violates our terms of use and we take measures to prevent it."

So far, if our own tests are any indication, these measures don't seem to be doing much good.

Meanwhile, Internet users in other countries are utilizing Hola to access Web applications that are not yet available in their regions at all, such as Hulu, Spotify, and Pandora. And employees of companies that block social networks from office workstations can use it to while away their afternoons on Instagram.

For citizens living under repressive regimes such as Iran, China, and Saudi Arabia, Hola's potential is considerably more transformative: Once optimized, it will allow them to view sites like Facebook, Twitter, and Google, as well as Wikipedia, The New York Times and other news and information outlets that are otherwise blocked by their respective governments.

And because the app changes a device's IP address — its unique Web signature — it makes it easier to evade government surveillance, helps shield computers and phones from hackers, and sidesteps location-tracking software. Finally, it renders the recent court decision striking down net neutrality rules essentially meaningless. After all, if an ISP can't see what content is flowing to your machine, they can't throttle your bandwidth.

Indeed, grandiose as it may sound, Hola could effectively transform the Internet, restoring the open Web and disrupting any number of existing industries. The best part? It does all this by tapping a plentiful resource nobody else seemed to realize was there.

The Birth of Hola

One day in December 2006, two Israeli software developers lay in separate hospital rooms about 15 miles apart. They'd just sold their company, Jungo, to NDS Group for $107 million, and after years of coding and hustling, they were literally falling apart. For Ofer Vilenski, it was shingles. For his partner, Derry Shribman, pneumonia.

Who knows how long they'd both been sick without realizing it. Maybe it was adrenaline that had kept them going as they finalized the deal, or a trick of the mind that kept their symptoms at bay. Whatever — they needed a rest, and they got one.

They decided to stay on with NDS for a year helping to integrate Jungo into the larger company and refine their software, an operating system for routers (it now powers FiOS, among other networks). Vilenski, who lived in a house in Netanya with his wife and children, and Shribman, a Tel Aviv bachelor, weren't quite sure what they'd do after that, but they were in agreement on one key point: Neither of them would ever work another day for the rest of their lives.

"I played golf the first day, and then I took my kid skiing for a week," Vilenski recalls. Shribman took up piano.

But it soon became clear that neither founder particularly liked the view from the sidelines. "I said, 'So what now? We just sit here and wait for death?'" Vilenski remembers.

A few weeks later, the two were talking. A question had been nagging at Shribman: How much more awesome would the Internet be if we could invent it from scratch?

Shribman looked at the Internet as it currently exists and saw some glaring inefficiencies. As Vilenski explains it, picture the Web as a system of pipes. If you could somehow peer inside, you'd see the same data flying by all day long as different users accessed it. "Justin Bieber puts out a new video, and you'd say, 'Here it is' again, again, again, again…" Vilenski explains. "That's a big redundancy and waste."

And it's getting worse. As the number and size of files whizzing around the world has grown, the response has been a surge of investment in ever larger pipes, to the tune of billions of dollars a year.

Whatever one's opinion of teen pop, it was hard not to wonder: Did all that data really need to travel all the way from YouTube's servers to a Belieber's computer or phone every time it was viewed? Couldn't it be stored locally?

To illustrate the problem, Vilenski, sitting in his office in Netanya, pointed his browser to the Business Insider home page and counted slowly to 11 while he waited for it to load. That's because the content must travel so much farther to his machine in Israel than to a device in the states. The typical solution to this problem is called a CDN or content delivery network. CDN providers like Akamai, Amazon Cloudfront, Rackspace, and Google build massive, electricity-gobbling server farms around the world to cut down the distances. And if BI decided to make a push for increased readership in the Middle East, we could pay our CDN for a piece of that far-flung network.

It's a fix, but an expensive one. What's more, the electrical power required to run such server farms around the clock is pumping ever-increasing amounts carbon emissions into the atmosphere. As Vilenski and Shribman kept talking, they realized there was a better way.

Artist's rendering
Mike Nudelman/Business Insider

How Hola Works

Rather than making use of CDNs, the developers' scheme was to build an entirely new Internet running on top of the existing system — an "overlay," as they call it — by making use of the invisible reserves of technological firepower that have been quietly building up under our noses — and in our pockets — for years.

Perhaps we never quite noticed it before because it's so ubiquitous: It's the spare storage space and processing power sitting unused in billions of personal computers, tablets and mobile phones around the world.

The hack devised by Vilenski and Shribman, Hola's chief technology officer, was impressively elegant: Hola turns every device on the network into a router that can warehouse and serve up packets of information (pieces of that Bieber video, chunks of the BI home page, whatever) as needed — thereby vastly shrinking the distance data has to travel.

"It redirects your traffic through other peoples' devices in an encrypted and secure manner," Vilenski explains, "and it creates multiple routes. You have maybe 10 connections in parallel serving the information, so things go faster."

According to Rushkoff, the principle underpinning Hola is based on a technological sea change: "Our processing power has increased so much faster than our networking speed that it's easier to piece together stuff from all these nodes than to get a coherent piece of media from far away on the network," he explains.

Crucially, the whole process is designed to be perfectly invisible to the user. The packets are encrypted, so you'll never know what's being stored on your device. And when you need the storage space, Hola steps aside instantaneously. As the software scans the network for usable nodes, it only makes use of devices under certain conditions: The device must be plugged in (so Hola won't to drain your battery), connected to Wi-Fi (to avoid racking up data charges), and not in use.

"Your computer is idle 90 percent of the day, even when you're working on it," Vilenski points out. The second you tap your keyboard, Hola backs off and doesn't go near your machine for 20 seconds.

As the user base grows, the system organically speeds up. As Vilenski and Shribman put it on their website, "The ultimate goal is to make the Internet 10 times faster!"

It's an ambitious target, and initially, that's all they really hoped to do. It wasn't until they got the system built and fired it up that the founders realized their project was potentially more disruptive than they'd originally hoped.

NEXT:'We Had to Make It Not Crappy'

'We Had to Make It Not Crappy'

Investing in Hola was an easy call for Moshe Levin, a prominent Israeli venture capitalist, who along with Draper Fischer Jurvetson, Trilogy and Magma put up $7 million "back when there was nothing but Ofer, Derry and a piece of paper."

Reinventing the Web is not a simple task, but Levin insists that Vilenski, a longtime acquaintance who served in the Israeli Air Force as a combat pilot, has the talent and drive to pull it off. "Ofer is probably the best I've seen in this industry," he tells Business Insider. "He is, on the one hand, very visionary. But at the same time, he's very practical and determined. I have never seen anyone as focused. He sees the target and he's not going to let it go."

Vilenski says his military service was useful preparation for his current endeavor. "Building a startup is like a battle every day," he says. "But nobody gets killed, so it's a fun thing. It's stressful, but it's not that stressful."

More funding followed from Horizons Ventures Ltd., the VC firm backed by Hong Kong business tycoon Li Ka-shing, Asia's wealthiest individual, and others, for a total of $18 million.
Hola investor Li-Kashing, Asia's wealthiest individual
Reuters

The partners began recruiting engineers and started coding, releasing the first iteration more than four years later, in December 2012, to an underwhelming response.

"We knew initially that as more users installed it and our tech matured, we could make the Internet noticeably faster," Vilenski recalls. "But initially we were just getting 30 percent increases, and nobody cared. The Internet fluctuates anyway."

Downloads were running at about 100 a day — not quite the harbinger of a game-changing business. "We were very disappointed," the CEO admits. "Imagine working on this product day and night for four and a half years and nobody wants to use it."

A marketing push would have brought in more users, speeding up the network, but Vilenski was adamant that Hola invest everything it had in programming talent. "To market the hell out of it wouldn't have helped," he says. "We had to make it not crappy."

Within a month of the roll-out, though, something unexpected happened: Users were beginning to praise the application, but not for the reason its creators had intended.

The fact that Hola makes it difficult, if not impossible, for website operators to track users had always struck Vilenski as a major flaw to be overcome. After all, online entities are keen to know where their traffic is coming from and what people are looking at. The whole Internet advertising model depends on the ability of marketers to identify and target specific users and demographic categories.

But it soon became clear that this supposed defect was precisely what everyone liked about it. "People were using it as an anonymizer," Vilenski says. On Jan. 24 of last year, a few tech bloggers took note (both of them emphasizing the ability to access geoblocked content). Vilenski awoke the next morning to find that 20,000 new users had downloaded the app.

They're now up to 13 million downloads in all, of whom 4 million are active users. During our Skype call, Vilenski checks the stats. "In the past 24 hours," he tells me, "we had 64,000."

The Return of the Open Web

It's hard to remember now, but the mainstream adoption of the Internet 20 years ago came bundled with a heady utopian promise.

A 1994 essay by prominent Web theorist Tim May, a former scientist at Intel and co-founder of the Cypherpunks movement, makes for nostalgic reading today. "No central control, no ruler, no leader ... no laws," May wrote. "No single nation controls the Net, no administrative body sets policy. The Ayatollah in Iran is as powerless to stop a newsgroup — alt.wanted.moslem.women or alt.wanted.moslem.gay come to mind — he doesn't like, as the President of France is as powerless to stop, say, the abuse of French in soc.culture.french. Likewise, the CIA can't stop newsgroups, or sites, or Web pages, which give away their secrets."

May's vision turned out to be only half true. Like so many wide-open territories before it, the Web has steadily been carved up and divided into separate fiefdoms, its contours mapped and surveyed, its wild spaces walled off and policed by both governmental and corporate powers.

While nations like China and Iran are at the forefront of Web censorship, they're not alone in imposing restrictions. Even the United Kingdom, an exemplar of Western democracy, recently implemented stringent new rules designed to block sites deemed improper for children. By the end of this year, some 90% of Web users in the U.K. will have to opt in to view forbidden content. Otherwise, their service will subjected to so-called "porn filters" so bluntly designed by some ISPs they have inadvertently blocked the British Library, among other public interest organizations. (Unsurprisingly, Hola has a rapidly growing user base in the U.K.)
British PM David Cameron chats with Tim Berners-Lee, inventor of the World Wide Web, in May 2013.
Reuters

"There are many more borders on the Internet than you'd imagine," observes Hola lead investor Moshe Levin. "Government borders, commercial borders, cultural borders and political borders. It's become much more limited than it was supposed to be. Hola protects consumers' right to anonymity and access."

For Levin, that often means tuning in to Patriots games using the NFL GamePass, and the vast majority of current Hola users seem to be employing the service for a similar purpose, sailing past the tools designed to lock down such content. Business Insider reached out to several U.K. networks whose content is easily accessible to American viewers with Hola — the BBC, Channel4 and ITV — and all declined to comment.

But is it legal? According to Mitch Stoltz, a staff attorney for the Electronic Frontier Foundation, using Hola as a circumvention tool is likely not a copyright violation. Not only because American law applies only within the borders of the U.S., but because it makes a key distinction between streaming a program and copying one (say, by downloading a torrent). "If you're not making a copy or distributing copies, you're not infringing copyright," Stoltz explains.

While using VPN proxies like Hola may violate a site's Terms of Service (Netflix's, for instance), this in itself is neither a crime nor a likely basis for a civil action.

Stoltz notes, however, that a few courts have found the use of VPN proxies to bypass a site's technological controls to be a violation of the Computer Fraud and Abuse Act, which is designed to prevent various forms of hacking. While it's unlikely one could be prosecuted for streaming a program in this manner, it is theoretically possible.

That said, given HBO's permissive view of password-sharing, Netflix and other networks may be content to look the other way if Hola makes their services more appealing — as long as the practice doesn't become so widespread it inhibits future licensing deals.

Sandra Aistars, CEO of the Copyright Alliance, a lobbying and advocacy group supported by entertainment industry labor unions and corporations like NBCUniversal, Viacom and News Corp, emphasizes the potential damage to small, independent creators if regional barriers aren't enforced.

"If this sort of financing goes away there are a lot of projects that won't get made," she says, "and the most underserved audiences, whether that's the LGBT community or particular ethnic communities or what have you, are the ones who will lose out."

Perhaps, but many experts agree that it's only a matter of time before the walls begin to tumble. "The erosion of regional licensing is one of those disruptions that is inevitable, but the media companies will try to postpone it for as long as possible," notes James McQuivey, an analyst for Forrester Research. "Media companies usually approach these kinds of things with the intent to block and obstruct, rather than see this kind of demand as a clear market message."

NEXT: The Death of the Server Farm? »

The Business of Disruption

There are numerous bands of zealous cyber-revolutionaries out there, driven by a selfless mission to unshackle Web users from the tyrannies of media conglomerates and repressive governments.

Hola isn't one of them.

Vilenski is building a business, and he says he and his backers have come up with "probably 100 ideas" of how to monetize the service once the system is humming along.

At one point, they tried running advertising, but ended the experiment when they decided it made for a poor user experience. (They may try again in the future.)

Meanwhile, revenues are beginning to trickle in from Hola's premium service, which is priced at $5 per month or $45 per year. Subscribers who upgrade can use the unblocking function without limitation, while non-paying users are only guaranteed four hours per day. And premium subscribers can opt not to have their devices become peers on the network. Vilenski predicts around 4% of users will ultimately choose the premium service — enough to provide a steady income stream, especially considering that unlike most VPN proxy services, Hola has little need for servers.
Mike Nudelman/Business Insider

But Vilenski has more expansive plans. "The bigger picture is that we're building this big peer-to-peer network, a serverless Internet. You can't block it. It's worldwide for real. It makes the Internet faster and makes broadcasting data cheaper. Our biggest problem is to provide value — for instance, to take server costs for Google and others from billions to millions. If we can do that, I'm sure we'll get compensated for it in a big way."

Still, given the recent disclosures about the NSA and the attendant paranoia about snooping, Web surfers are becoming more cautious. What if Hola is the biggest honeypot ever devised (aside from Facebook, that is)? Is it really prudent to construct a new Internet around code controlled by a single company?

Vilenski replies with a laugh, touching his pinkie to the corner of his mouth, Dr. Evil-style. "You're asking me to prove I'm not a spy," he says. "All I can say is there's not enough money in the world you could pay me to be one. I've already made enough money. We're trying to build a $1 billion company — multibillion, potentially. This is our goal. Why? Because we want to."

One major test will begin on Feb. 7 at 11 a.m., EST, when Hola's users will try livestreaming the Olympic Opening Ceremonies from a variety of foreign websites, bypassing the vast system of electronic borders seeking to hem them in. Those who succeed will be watching up to eight and a half hours ahead of most Americans, since NBC is declining to carry the ceremony live on TV or to stream it at all, presumably to boost broadcast ratings in prime time.

There will be pageantry and spectacle and most likely a flurry of bizarre and over-the-top performances. Then the Olympians will parade around Fisht Stadium, a stirring display of athletic excellence and a testament to the human spirit, putting aside ethnic and national differences and coming together for a common purpose, borders be damned.

Correction: An earlier version of this story failed to note that under a broad interpretation of the Computer Fraud and Abuse Act, the circumvention of geoblocking tools could be ruled a criminal violation. Business Insider regrets the error.